What Should Caregivers Know About Creating a Care Agreement?

If you are providing regular help to an aging parent or relative and considering getting formal payment for that work, be sure to talk to an elder law attorney in Columbia, MD. An experienced lawyer will know how to create a care agreement that protects both of you and satisfies Maryland law. 

What Caregivers Should Know About Creating a Care Agreement

What is a care agreement?

A care agreement is sometimes called a personal care agreement or a personal services contract, but it’s basically a written document that sets out the specific help you will be giving, when you will give it, and how much you will be paid for that work. Families create these agreements most often when an adult child or other relative has to step in to handle daily tasks that otherwise a professional home-care worker would have to be hired to perform. 

Can’t my relative just give me money?

Without a written agreement, money that moves from the care recipient to you is considered a gift. The reason this is such a problem is that, if your relative ends up later needing long-term care and depends on Medicaid, Medicaid will review all financial transfers that took place for five years prior to approving any long-term care benefits. 

Any transfer of funds that was less than fair market value during that window can trigger a penalty period of ineligibility, and your loved one may not be able to get funds for the care they require. Medicaid has this look-back period to stop people from hiding assets to become eligible for care they’re not actually eligible for. A properly drafted care agreement shows that the payments were made in exchange for documented services, not as gifts.

Can we do a retroactive agreement?

No, the agreement must look forward, never back. The agreement should have a start date, a list of duties, the schedule, and the pay rate.

Can my loved one pay me extra because they have it?

No, your compensation rate for this work has to be reasonable. Once again, Medicaid will compare the rate you received with what local home health and personal care aides earn, and if your rate was far above the local market, the payments – or at least the excess – will be treated as gifts. 

Do I need an elder law attorney for drafting an agreement here in Columbia, MD?

The problem with drafting the document yourself is how easy it is to miss something that will later either cause problems with Medicaid or with other family members. When you have a professional review the language (or write it entirely for you), compare it to current state and federal rules, confirm that the pay rate is defensible, and make sure the contract fits any existing estate plan, power of attorney, or trust documents that might be in place, you’ll have peace of mind that the agreement is doing what it’s designed for. 

For help getting your care agreement in place, contact Elville and Associates in Columbia, Rockland, or Annapolis today to set up a free consultation. We proudly serve families across Central Maryland, the Washington Metro Area, and the Eastern Shore.

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